When facing foreclosure it is important that homeowners understand all of the options available to help prevent foreclosure. Understanding these options will help in making an educated decision on next steps and feel comfortable knowing they have done everything possible. These are the 8 basic options available to homeowners that are facing foreclosure.
Deed-in-Lieu of Foreclosure
For homeowners who have no chance to save or sell their property and want to end the foreclosure process, a deed-in-lieu of foreclosure may be an option. A deed in lieu of foreclosure is a deed instrument in which a homeowner conveys all interest in the property to the lender to satisfy a loan that is in default and avoid foreclosure proceedings. Deed-in-lieu of Foreclosure, also known as a “Friendly Foreclosure,” is not as damaging as letting the home go to foreclosure. In most cases the homeowner will show on their credit that they defaulted on the loan and the bank took the home back. It is still considered a form of foreclosure which can prevent a homeowner from purchasing a home for 5 -7 years, according to the FHA guidelines. A homeowner should seriously consider all other options before any type of foreclosure.
It is important for a homeowner who decides to short sell their home to understand they only have one chance at it. This means they should select a qualified individual or team to assist them in the process. Many times, people select a family member or friend who is a realtor to sell their home for them. What they do not understand is a short sale is not just selling a home, but also takes a strong understanding of the foreclosure process and how to negotiate with the lenders.
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